Marque Magnetics design and manufacture transformers, chokes and a range of electronic wound components. Marque Magnetics products are locally manufactured in their Glendene factory and the high volume commercial product is made in their plant in China. The key business issue Marque Magnetics faced with their existing system was the control of the quotation process and associated product costing that underpins quotation development. The lack of control over production costings and quotations meant that Marque Magnetics were accepting work with no clear idea of the profitability.
Marque Magnetics specific problems existed with the legacy system that includes:
- Purchasing costs - Marque Magnetics did not have access to the costs of the raw materials which impeded the development of new quotations. (Raw material costs are a significant proposition of the end product cost).
- Retail - The existing system was a retail package. Its job costing functions did not manage the capture and reporting of labour. Labour costs are a significant portion of the product costs and this lack of control and understanding of actual costs meant that new quotations could be based on incorrect data.
- Quotation Functionality - Marque Magnetics had a quotation function that failed to provide quotation history, flexibility and visibility.
Marque Magnetics wanted to manage the product costing to quotation cycle as they intended to provide a personalised service (engineer–to–order) to their customers.
Marque Magnetics sought to manage their production within a tight band. The size of this band was called the ‘slop’. This slop is defined as the variation from standard to actual cost for a job. Since implementing Epicor Vantage, Marque Magnetics variable slop has disappeared.
The current process is to review the actual to standard cost of 80% of all jobs with a tolerance of 10%. The engineering and production teams examine key jobs at both ends of the spectrum for example, those with actuals outside the slop with costs too high or too low. This review determines if the variance should be addressed by production or engineering or whether the standard cost needs to change.
The process of examining jobs ‘outside the slop’ has two objectives:
- Firstly it provides engineering and production with an opportunity to look at any jobs that are away from intended standard and determine why this has occurred and if it can be fixed, with an engineering or production solution. This review of variant work is a useful way of advancing the efficiency of the manufacturing facility.
- When the variation is inappropriate then this standard can be changed. It is this review of standards that provides feedback to ensure the accuracy of standards used for quotation development.
Marque Magnetics needed to address the issues above and identified COGITA and their ERP Vantage solution to provide engineer–to–order services. Customers can benefit from the Epicor Vantage performance of the manufacturing plant and its effect on profitability.
Quotation development prior to Epicor Vantage was a manual process with the software providing little assistance. Marque Magnetics did not have the flexibility within the software to manage and develop quotations in an interactive manner. There was a lack of visibility of all quotation data. The implementation of Epicor Vantage has improved this key business process. Epicor Vantage benefits include:
- The ability to manage labour cost on quotation down to each operation, allowing the engineering department to receive accurate labour times
- Having visibility of all cost elements pertaining to a quotation
- Access to historical quotations. Many quotes are for repeat or similar work and having access to and visibility of the details of former quotation to a client is important.
- Epicor Vantage has allowed clients’ expectations for fast quote turnaround and enquiries as an efficient tool for assembling and managing quotations.
The manufacturing facility now has a tool to manage and compare their performance to standard. A range of KPIs (Key Performance Indicators) allows the management team to check and monitor performance and ensure that plant profitability is maintained at desired levels.